Angela Merkel has delivered a sharp rebuke to Italy and France for hindering the eurozone's recovery by breaking longstanding fiscal rules.

The German chancellor, under pressure following a fall in GDP in the second quarter, said faltering growth was the direct result of the 18-member currency zone's inability to punish those countries that ran high deficits in contravention of limits set by Brussels.

She said Germany had shown it was possible to cut the government's annual spending deficit while at the same time improve the economic situation.

FranÃ§ois Hollande celebrated his 60th birthday this week with his four children in the relative peace and quiet of an official holiday in southern France. But if the countryâ€™s embattled socialist president was hoping for some respite from what has been a testing year, he can probably think again.

Growth figures, out on Thursday, are expected to show that the French economy barely expanded during the second quarter of this year after stagnating in the first. Most economists now estimate growth of between zero and 0.1 per cent after recording no growth in the first quarter.

The Italian economy shrank in the second quarter, according to an official estimate on Wednesday, taking economists by surprise and provoking concern that violence in Ukraine and tension with Russia could be pushing the broader eurozone back into recession.

Italyâ€™s gross domestic product contracted 0.2 percent from April through June, compared with the first quarter of 2014, Istat, the Italian statistics office, said in a preliminary estimate. It was the second quarterly decline in a row for Italy, meeting the most common definition of a recession. In the first quarter, output shrank 0.1 percent compared with the previous quarter.

The decline dashed hopes that Italy, the third-largest eurozone economy after Germany and France, was finally emerging from a decade of stagnation.

Germany reduced its roughly 2 trillion euros of public debt last year for the first time since post-war records began in 1950, helped by the reduction of toxic assets in government-run bad banks, the Statistics Office said on Thursday.

The combined debts of the federal government, the 16 federal states and local authorities plus social security fell by 1.5 percent, or 30.3 billion euros. That leaves the overall debt burden in Europe's biggest economy at 2.04 trillion euros.

The strongest decrease, 5.2 percent, was in the area of social security, said the Statistics Office.

Federal and state government debts had been eased because toxic assets that came from state-owned banks Hypo Real Estate and WestLB were off-loaded. These assets were parked in so-called bad banks during the global financial crisis.

At the federal level, Germany is aiming to have no new borrowing next year. Low employment and steady growth have generated record tax revenues while rock-bottom interest rates have reduced the burden of servicing Germany's 1.3 trillion euros of federal debt.

In the next three years, the federal government expects its debt as a percentage of gross domestic product (GDP) to fall to under 70 percent from nearly 80 percent.

New car exports from the UK rose again in July 2014 â€“ meaning more cars have been exported from the UK since 2010 to date than in any other decade on record.

A British car production total of 132,570 cars in July marked a 2.8% rise over 2013, the SMMT has revealed, with exports growing half a percentage point faster than cars destined for the UK.

Year to date, while cars built for the home market have gone up by 2%, exports have almost doubled since this point last year, with growth of 3.8%.

Already, 728,440 cars have left the UK â€“ thatâ€™s 78.8% of total production â€“ and the SMMTâ€™s Mike Hawes declared the total number of cars destined for abroad breaking the 5 million barrier â€œa major milestone and testament to the burgeoning reputation of UK automotive excellence and demand for British-made cars.â€

Next month, British car production in 2014 will top the 1 million mark and, by the end of the year, well over a million cars will have been exported from the UK in 2014 alone.

All those cars are now worth much more as well, with the average export car worth standing at more than Â£20,600. In 2004, it was just Â£10,200. Booming premium manufacturer Jaguar Land Rover is leading growth here, although Britainâ€™s supercar manufacturers Aston Martin, Lotus and McLaren are also contributing to the rise in value.

This is helping the UK automotive industry claim to add Â£12 billion in value to the UK economy. Such figures, said Hawes, reflect â€œthe diversity of the products we make and proving the sectorâ€™s worth as a global investment opportunity.â€

Indeed, although UK car manufacturing still has a little way to go before it beats 1973â€™s all-time record of 1.9 million cars, the number of exports â€“ a crucial contributor to British GDP â€“ are already way ahead.

Hollande is a lunatic clown who makes a great and proud country miserable. France is now becoming a sick man of Europe because of his economic policy. Sarkozy was a much better, more influential and respected resident who boosted the illustrious image of France on global stage, whereas Hollande is a joke and also the least popular president of all time.

The pound's strength yesterday continued to strike a blow to the profits of major British companies. Huge aerospace and defence firms Rolls-Royce and BAE systems, as well as engineering company Weir Group all announced that their profits had taken a hit from the currencyâ€™s rise.

Both BAE and Rolls-Royce also said they had suffered from lower defence demand, as the US and UK governments had imposed more significant cuts on their military budgets.

Rolls-Royce saw its underlying profit fall 20 per cent in the first half of 2014 to Â£644m ($1.1bn), as underlying revenue also fell seven per cent to Â£6.8bn ($11.3bn).

While Rolls-Royce expects improvement in the second half from higher revenue and cost reduction, chief executive John Rishton said the group would â€œexperience growing painsâ€.

BAE also took a hit, with underlying profit down nearly eight per cent in the first half to Â£802m ($1.4bn), as sales fell 10 per cent to Â£7.6bn ($12.7bn).

Ian King, BAE chief executive, said: â€œExcluding the impact of exchange translation, the group remains on track to deliver earnings in line with our expectations for the full year.â€

The long-expected follow-on order from Saudi Arabia for Eurofighter Typhoons has still not materialized, but in its half-yearly report BAE Systems revealed that it expects to receive orders worth about $2.2 billion to upgrade Saudi aircraft. Earlier this year, a protracted renegotiation of the original â€œAl Salamâ€ deal for 72 aircraft was finally concluded. BAE Systems plans to deliver 12 Typhoons to Saudi Arabia this year, and continues work on the contract with Oman for 12 aircraft, for delivery from 2017.

Meanwhile, in the Airbus D&S in-house journal, Domingo Urena Raso, the companyâ€™s head of military aircraft, wrote, â€œWe need to add capabilities to the Eurofighterâ€”like the E-scan radar for instanceâ€”and make it more attractive both for our home countries and for export.â€ He continued, â€œThere is no need to panic; we have known for 10 years that Eurofighter production will end in 2018.â€ At the recent Farnborough airshow, the Eurofighter consortium displayed the prototype, industry-funded E-scan radar. In the half-yearly report, BAE Systems confirmed that the British government has signed a three-year contract worth more than $120 million â€œto de-risk E-scan radar development for the Royal Air Forceâ€™s Typhoon fleet ahead of the award of a full-scale development contract.â€